Truworths feels the pinch

Business News / 21 February 2014, 08:00am

Nompumelelo Magwaza

Truworths declined 74 percent of new account applications during the six months to December last year, the fashion retailer said yesterday, further exacerbating concerns that the credit environment in the country is deteriorating.

“Our customer is part of the mass middle market that relies on credit. It is currently a particularly tough environment for retail credit, with 71 percent of our sales being on credit,” Truworths chief executive Michael Mark said.

The retailer said the continuing deterioration in the credit environment had affected its interim results, as retail sales rose by 7 percent to R5.9 billion compared with 14.8 percent growth a year earlier.

New account acceptance rates fell from 35 percent in the previous period to 26 percent.

Simon Anderssen, an investment analyst at Kagiso Asset Management, said value retailers like Mr Price were likely to perform best as consumers were shopping down and the increase in competition was concentrated in the middle- to upper-income market.